The Biden-Harris Administration announced that some borrowers will soon receive debt cancellation after 10 years in repayment, instead of the previously required 20 to 25 years for most borrowers.
Starting in February, borrowers enrolled in the Saving on a Valuable Education (SAVE) Plan who initially borrowed $12,000 or less in federal student loans will have any remaining balance on their loans canceled after 10 years of qualifying repayment. Those who borrowed more than $12,000 may also benefit: For every additional $1,000 borrowed, the borrower will have one additional year in repayment added, up to a maximum of 20 years (for borrowers repaying only undergraduate loans) or 25 years (for borrowers repaying at least one graduate loan).
Borrowers who have made payments after they were eligible for forgiveness will receive a refund of those amounts. The Department of Education has more details about this program here.
What do borrowers need to do to benefit?
Borrowers already enrolled in SAVE do not need to do anything other than remain in the program and continue making any required monthly payments. Once borrowers in SAVE reach the required amount of time in repayment, the Department will cancel their remaining balance. Borrowers should receive an email and/or letter when this occurs.
Borrowers not enrolled in SAVE should enroll to benefit from this new timeline for loan cancellation. Below are the steps for borrowers with different loan types to enroll in SAVE:
- Borrowers with Direct Loans enroll in SAVE directly. Enroll online at studentaid.gov/idr or by calling your student loan servicer for assistance. Online enrollment should take about 10 minutes or less.
- Borrowers with older federal student loan types, including Federal Family Education Program Loans (FFEL or FFELP) and Perkins Loans, can enroll in SAVE by consolidating their loans into a Direct Consolidation Loan and repaying it using SAVE. The whole process should take about 30 minutes or less. Check the Department of Education’s Loan Simulator or loan details on studentaid.gov, or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243 to find out whether you have these older loan types.
Consolidate by the end of April 2024 to be included in the one-time account adjustment and have more time counted toward loan forgiveness.
- Borrowers with loans in default can take advantage of the Fresh Start program to get out of default and enroll in SAVE. Find out how to request a Fresh Start here. Borrowers who have defaulted FFEL or Perkins loans must consolidate to enroll in SAVE.
Unfortunately, Parent PLUS borrowers are generally not eligible for SAVE, although they may be able to access the plan for a limited time through a more complicated workaround (see here for more).
What time counts toward the 10 years?
Thanks to the Administration’s one-time payment count adjustment, any past time in repayment between July 1, 1994 and now will be counted as qualifying time toward loan forgiveness in the SAVE plan. This includes:
- All time in repayment (not in a forbearance, deferment, grace period, or default).
- All time between March 2020 and September 2023 (when payments were paused due to the pandemic), whether or not the borrower made payments.
Additionally, some prior time in deferments and forbearances will count, including:
- All time in economic hardship deferments.
- All time in any deferment (except in-school deferment) prior to 2013.
- 12 or more months of consecutive time in forbearance.
- 36 or more months of total time in forbearance.
- Borrowers can also submit a complaint to the Federal Loan Ombudsman to request that shorter periods of forbearance be counted if their loan servicer told them they weren’t eligible for IDR.
For consolidated loans, any time in repayment before consolidation also counts. After the one-time payment count adjustment is completed in roughly July 2024, borrowers will generally need to make payments in an IDR plan to continue accruing more time toward forgiveness.
